How debt collectors get your money

At first, you'll just get letters and phone calls from debt collectors.

After six months of nonpayment, collectors may go to court.

Debt collectors have three legal tools to make you pay your debt.

There's no question that falling behind on bills is a stressful experience. While many people want to pay off their debt as quickly as possible, sometimes it's simply not possible.

Because of medical issues, job loss or other catastrophic events, people may go further into the debt collection process than they ever imagined. Here's what to expect if it happens to you.

If you stop paying your credit card debt, you can expect letters and calls from collectors within days or weeks of your first missed payment. The communication can be frequent and exasperating, but it doesn't usually have any teeth at first.

Beyond six months, debt collectors may decide to continue with calls and letters or to ratchet up the stakes. Ignoring the debt problem will only make it worse, says Lynne Labrador, a senior director at the credit-scoring company FICO.

"People who avoid the phone calls and the letters are more likely to see a lender escalate to aggressive tactics like taking judgments," she says.

Small debts of a few hundred dollars or less won't typically get forceful treatment. But if you've racked up significant debt -- a few thousand dollars -- you shouldn't expect to get off the hook. Debt collectors can sue to get their money.

When a debt collector sues

If a collector sues, you'll get plenty of advance warning. Before the court date, law requires that a person is given adequate notice of legal proceedings. You'll get a demand letter, which is your final notice before litigation begins. Then you'll receive formal notification, known as a summons and complaint, says Labrador. This formal notification is typically served in person or by certified mail. A court date is set.

Debt collectors hope that you won't show up for the proceedings. That will allow them to get a default judgment, which is a judge's decision without a defendant's input because of his or her failure to show, says Robert Brennan, an attorney in La Crescenta, Calif.

"That's the ideal situation, because then they can start collecting on the default. Contested proceedings, on the other hand, can get expensive and time-consuming," Brennan says. It's worth your time to go to court, even without an attorney, so you can tell your side of the story.

If there is a judgment, debt collectors have a number of ways to collect your money.

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Wage garnishment

If you have a job, you can expect that collectors will try to get a piece of your paycheck. To gain access to this money, they'll work with your employer, not you. In wage garnishment, a portion of your wages will be deducted directly from your paycheck.

"Although not all states allow wage garnishment, this is typically the first thing that collectors are going to try since it's the most dependable way for them to get paid," says Gerri Detweiler, co-author of "Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights." At most, collectors can take 25 percent of disposable earnings after Social Security and taxes.

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